Electric power industry set for plant growth

Edited by the Engineeringtalk editorial team Nov 25, 2002

The electric power industry is poised to expand in order to meet the underlying demand for additional electric power, according to a new study.

The electric power market is an exceedingly dynamic one, with many opposing underlying factors at work concurrently.

Electric power companies spend an enormous amount of money on capital projects every year to ensure a steady stream of revenue for the future.

For 2002 and beyond, many firms are focusing on their financial performance through continued prudence in spending and more attention to ROI in new projects.

Overall, industry revenues exhibited only a modest growth over the last two years and spending on budgets was somewhat dampened in 2002.

According to Russ Novak, author of a new study from ARC Advisory Group, "Expansion will be uneven among the geographic regions, with the US and Europe spending less over the short term".

Novak continues, "However, the electric power industry is poised to expand in order to meet the underlying demand for additional electric power in both the developing and developed regions of the world".

There are a number of factors contributing to growth of spending for the power industry.

These include the entrance into the electric power market of new players, the convergent energy companies, and the large industrial consumers now erecting their own generating facilities.

Also, there is a pent-up demand for improvement and expansions in transmission facilities.

Additionally, there is the impact of the replacement of older, less efficient generating facilities with more efficient turbine designs, and the switch from high polluting fossil fuels plants to cleaner, more environmentally friendly generating methods.

Other factors are the possible synergy of combining electrical delivery with IT/broadband delivery, which will possibly increase the demand for both services.

Finally, there is the need to integrate operational-based systems with business processes, and the upgrading as necessary of system hardware to allow this to happen.

ARC's "Electric power industry plant-level expenditures and best practices" study represents a broad and comprehensive view of the total industry expenditures on products and services for the electric power industry.

While automation and associated products are a key component of this market study, the larger segment of the report relates to the variety of services required to implement, maintain, optimize, and operate complete electric power enterprises.

Total market expenditures are evaluated, including products and services provided by external suppliers and the value of services provided by electric power companies in-house.

For this report, plant-level expenditures have been separated into these distinct categories: total industry plant-level expenditures; plant-level capital expenditures; plant-level hardware and software capital expenditures; manufacturing hardware and software capital expenditures; plant-level services capital expenditures; and plant-level operations and maintenance expenditures.

Within each of these areas, a five-year forecast has been developed for industry expenditures by product and service type that are relevant to each category.

Total industry plant level expenditures are further segmented by geographic region, in-house versus outsourcing, and capital versus operations and maintenance expenditures.

The goal of this report is to provide industry executives strategic information concerning industry expenditure trends and best practices within the electric power industry.

Additional information on this study can be found on the ARC Advisory Group website.